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Transcontinental: Largest Deal in its History, Buys 12 CanWest Newspapers

Press release from the issuing company

MONTREAL, QUEBEC--July 11, 2002 -- Transcontinental Group today announced the largest transaction in its history, the purchase of CanWest Global Communications' 12 community newspapers and 32 related publications in the four Atlantic provinces and Saskatchewan, for $255 million. Included in those 12 community newspapers are 10 dailies, eight of which are located in the Atlantic provinces and two in Saskatchewan, and two weeklies. Transcontinental has also acquired the related printing operations and becomes the printer of the National Post for the Atlantic provinces. Combined, the newspapers employ close to 900 people and generate annual revenues of approximately $100 million. The transaction is subject to the approval of regulatory authorities and is expected to close in mid-August. The following is a list of the community newspapers acquired by Transcontinental:the dailies include, in Newfoundland, The St-John's Telegram and The Western Star in Corner Brook; in Nova Scotia, The Halifax Daily News, The Cape Breton Post in Sydney, The Evening News in New Glasgow and The Truro DailyNews; in Prince Edward Island, The Charlottetown Guardian and The Journal Pioneer in Summerside; and in Saskatchewan, The Prince Albert Daily Herald and the Moose Jaw Times Herald. The weeklies include the Northern Light in Bathurst, New Brunswick, and The Southwest Booster in Swift Current, Saskatchewan. Also included in the transaction are commercial printing facilities Ad Venture, in Saskatoon, and Williams & Crue, in Summerside. With this acquisition, Transcontinental, already Canada's leading publisher of consumer magazines, consolidates its position as Canada's second-largest publisher of community newspapers. The company now owns 79 community newspapers, 10 of which are dailies, in eight provinces, as well as 83 related publications. "This is a great day for Transcontinental and its employees," said Remi Marcoux, Chairman of the Board and Chief Executive Officer of Transcontinental Group. "Community newspaper publishing in Canada is one of the niches that we promised our shareholders we would develop through acquisition. In accordance with our development strategy, we acquire companies that complement our core activities, are profitable and well managed, have potential for growth, and contribute positively to Transcontinental's earnings. Furthermore, the agreement to print the National Post constitutes a further step in strengthening our partnership with CanWest, for whom we already print the National Post in Vancouver. "This acquisition will immediately be accretive to Transcontinental's earnings," added Mr. Marcoux. "Even after this transaction, which will be financed with available funds and existing credit facilities, Transcontinental will continue to enjoy a solid balance sheet, with a net debt to total capitalization ratio that is significantly lower than the long-term target of 45% set by management. We remain in an excellent position to pursue our growth strategy." Andre Prefontaine, President of Transcontinental Media, Transcontinental Group's publishing and distribution subsidiary, was delighted by the transaction: "This acquisition gives concrete form to our strategy of significantly increasing our involvement in community newspaper publishing across Canada. Combined with the 62 papers we publish already, mainly in Quebec, the eight titles in the Atlantic provinces will make us the leading community newspaper publisher and flyer distributor in Eastern Canada. Similarly, adding the Saskatchewan newspapers to the ones we now publish in Manitoba will increase our presence in the Prairies. "We are very pleased to warmly welcome the employees of these 12 newspapers and 2 commercial printing facilities to the Transcontinental family," continued Mr. Prefontaine. "Our new colleagues will soon see that we share many things in common that are reflected in the quality of the content, the superior services for advertisers, and the newspaper's commitment to the community." The fourth largest print media group in Canada, with annual revenues of close to $500 million and about 3000 employees including this transaction, Transcontinental Media is the leading publisher of consumer magazines in Canada and the country's second-largest publisher of community newspapers. It is also the leading distributor of advertising material in Canada, a position that will be enhanced by the distribution facilities acquired in this transaction. Transcontinental Media is a wholly owned subsidiary of Transcontinental Group, one of the largest commercial printers in North America and the leader in Canada in most of its niches. Including the transaction announced today, the Corporation hasclose to 12,000 employees in Canada, the United States and Mexico and reported revenues of $1.8 billion in 2001. Transcontinental is a Canadian corporation whose Class A Subordinate Voting Shares and Class B Shares are listed on the Toronto Stock Exchange under the ticker symbols GRT.A and GRT.B.